An estimated 80 to 90 percent of milk in developing countries is produced in small-scale farming systems. These operations are based on low inputs, so production per dairy animal is quite low. Most milk produced by smallholders in developing countries comes from one of the following production systems:

• Rural smallholder dairying: Dairying is often part of a mixed farming system in which manure is used for cash crop production. Dairy animals are fed on grass, crop residues and cultivated fodder. Supplementary feeding is practised only when feasible.
• Pastoral/agropastoral dairying: These systems are land-based and milk is often the most important subsistence item. Dairy production is generally associated with cropping, but nomadic pastoralists practise little or no agriculture and roam the land in search of grazing grounds and water.
• Landless peri-urban dairying: This is a purely market-oriented production system located within and close to the boundaries of cities. Peri-urban dairy producers benefit from their closeness to markets, but their production is based on purchased inputs and may encounter problems of feed supply and waste disposal. In recent decades, a peri-urban dairy sector has developed very rapidly around the larger cities of many developing countries, in response to expanding market demand. The concentration of milk production in close proximity to urban centres may threaten human health.

In addition to these traditional small-scale milk production systems, some developing countries have large-scale dairy enterprises. Generally, large-scale producers do not account for a large share of national milk production.